1. Chapter 14Investments in Debt and Equity Securities Question MC #11 (Points: 3) For which type of investments would unrealized increases and decreases be recorded directly in an owners' equity account? 1. Held-to-maturity securities 2. Trading securities 3. Equity method securities 4. Available-for-sale securities Save Answer 2. Chapter 14Investments in Debt and Equity Securities Question MC #16 (Points: 2.5) If the combined market value of available-for-sale securities at the end of the year is less than the market value of the same portfolio of available-for-sale securities at the beginning of the year, the difference should be accounted for by 1. reporting an unrealized loss in security investments in the stockholders' equity section of the balance sheet. 2. a footnote to the financial statements. 3. reporting an unrealized loss in security investments in the income statement. 4. a credit to Investment in Available-for-Sale Securities. Save Answer 3. Chapter 14Investments in Debt and Equity Securities Question MC #20 (Points: 2.5) Which of the following is true? 1. Available-for-sale securities can be classified as current or noncurrent depending on management's intent. 2. Trading securities should not be classified as current under any circumstance. 3. Trading securities can be classified as current or noncurrent depending on management's intent. 4. Held-to-maturity securities should not be classified as current under any circumstance. Save Answer 4. Chapter 14Investments in Debt and Equity Securities Question MC #29 (Points: 2.5) Angular Co. purchased the following portfolio of available-for-sale securities during 2014 and reported the following balances at December 31, 2014. No sales occurred during 2014. All declines are considered to be temporary. Security Cost Market Value at 12/31/14 X $ 80,000 $ 82,000 Y 140,000 132,000 Z 32,000 28,000 Angular Co. should report what amount related to the securities transactions in its 2014 income statement? 1. $10,000 unrealized loss 2. $12,000 unrealized loss 3. $0 4. $2,000 unrealized loss Save Answer 5. Chapter 14Investments in Debt and Equity Securities Question MC #43 (Points: 2.5) On October 1, Ryan Company purchased $200,000 face value 12% bonds for 98 plus accrued interest and brokerage fees and classified them as held-to-maturity securities. Interest is paid semiannually on January 1 and July 1. Brokerage fees for this transaction were $700. At what amount should this acquisition of bonds be recorded? 1. $202,700 2. $196,000 3. $202,000 4. $196,700 Save Answer 6. Chapter 14Investments in Debt and Equity Securities Question MC #45 (Points: 3) Eric Company reports its income from its investment in Kate Company under the equity method. Eric recognized income of $150,000 from its investment in Kate during the current year. No dividends were declared or paid by Kate during the year. Eric would show the $150,000 in its statement of cash flows for the current year prepared under the indirect method as 1. a deduction from net income in the operating activities section. 2. cash from investing activities. 3. a reduction of the investment account. 4. a noncash activity. Save Answer 7. Chapter 14Investments in Debt and Equity Securities Question MC #55 (Points: 3) The following information relates to Bower Companys short-term investment in equity securities available for sale at the end of 2013 and 2014 (in 000s): Market Value Equity Date Date Selling Dec. 31 Dec. 31 Security Acquired Cost Sold Price 2013 2014 A 7/1/2013 $ 28 6/30/2014 $ 30 $ 32 B 8/1/2013 48 7/15/2014 44 40 C 1/1/2014 $ 84 $ 68 Bowers net realized and unrealized gains and losses for 2014, respectively, would be 1. $2 realized loss; $8 unrealized loss. 2. $2 realized loss; $8 unrealized gain. 3. $2 realized loss; $16 unrealized loss. 4. $2 realized loss; $16 unrealized gain. Save Answer 8. Chapter 14Investments in Debt and Equity Securities Question MC #64 (Points: 3) The following information is available for an enterprises security investments as of December 31, 2014: Valuation Market Original Allowance Value Investment Cost 12/31/2013 Classification 12/31/2014 Mingo stock $ 40,000 $3,000 dr. SAS $ 39,000 Flash bonds $ 30,000 $ 2,000 cr. TS $ 32,000 The Flash bonds were purchased at par value. SAS = securities available-for-sale TS = trading securities In June 2015, the enterprise decided to reclassify the Mingo stock as trading securities. The stock had a market value of $41,000 at the time of the reclassification. What amount of holding gain or loss is immediately recognized in 2015 earnings? 1. $1,000 gain 2. $2,000 gain 3. $3,000 gain 4. $1,000 loss Save Answer 9. Chapter 14Investments in Debt and Equity Securities Question MC #68 (Points: 3) Which of the following is true regarding the provisions of International Accounting Standard No. 39, Financial Instruments: Recognition and Measurement (amended 2005)? 1. IAS No. 39 applies only to financial liabilities. 2. IAS No. 39 applies to both financial assets and financial liabilities. 3. IAS No. 39 applies only to accounting for derivatives and loans and receivables. 4. IAS No. 39 applies only to financial assets. Save Answer 10. Chapter 18Earnings Per Share Question MC #11 (Points: 3) When using the if-converted method to compute diluted earnings per share, convertible securities should be 1. included whether dilutive or not. 2. included only if dilutive. 3. not included. 4. included only if antidilutive. Save Answer 11. Chapter 18Earnings Per Share Question MC #12 (Points: 2.5) The if-converted method of computing EPS data assumes conversion of convertible securities at the 1. beginning of the earliest period reported (regardless of time of issuance). 2. beginning of the earliest period reported (or at time of issuance, if later). 3. middle of the earliest period reported (regardless of time of issuance). 4. ending of the earliest period reported (regardless of time of issuance). Save Answer 12. Chapter 18Earnings Per Share Question MC #17 (Points: 3) For a company having several different issues of convertible securities and/or stock options and warrants, the FASB requires selection of the combination of securities producing 1. the earnings per share figure midway between the lowest possible and the highest possible earnings per share. 2. any earnings per share figure between the lowest possible and the highest possible earnings per share. 3. the lowest possible earnings per share. 4. the highest possible earnings per share. Save Answer 13. Chapter 18Earnings Per Share Question MC #24 (Points: 2.5) An entity that reports a discontinued operation or an extraordinary item shall present basic and diluted earnings per share amounts for those line items 1. either on the face of the income statement or in the notes to the financial statements. 2. only on the face of the income statement. 3. only if management chooses to do so as these amounts are not required to be disclosed either in the financial statements or the notes thereto. 4. only in the notes to the financial statements. Save Answer 14. Chapter 18Earnings Per Share Question MC #29 (Points: 3) Gold Coast Supplies had 80,000 shares of common stock outstanding at January 1. On May 1, Gold Coasts Supplies issued 21,500 shares of common stock. Outstanding all year were 30,000 shares of nonconvertible preferred stock on which a dividend of $3 per share was paid in December. Net income for the year was $300,000. Gold Coast Supplies should report basic earnings per share for the year of 1. $3.26 2. $2.07 3. $2.23 4. $3.18 Save Answer 15. Chapter 18Earnings Per Share Question MC #38 (Points: 2.5) At December 31, 2013, the Agricole Company had 600,000 shares of common stock outstanding. On September 1, 2014, an additional 400,000 shares of common stock were issued. In addition, Agricole had $20,000,000 of 8 percent convertible bonds outstanding at December 31, 2013, which are convertible into 400,000 shares of common stock. No bonds were converted into common stock in 2014. The net income for the year ended December 31, 2014, was $7,000,000. Assuming the income tax rate was 40 percent, what should be the diluted earnings per share for the year ended December 31, 2014? 1. $7.02 2. $5.53 3. $5.00 4. $10.85 Save Answer 16. Chapter 18Earnings Per Share Question MC #51 (Points: 3) When a company with a complex capital structure has a loss from continuing operations and potentially dilutive securities, the calculation of earning per share (EPS) results in 1. EPS being reported, using the same calculation of dilutive EPS as would be used if net income were positive. 2. EPS being reported, using securities in the calculation of dilutive EPS that would be anti-dilutive if income were positive. 3. no EPS being reported. 4. simple EPS (no potentially dilutive securities are included in the calculation). Save Answer 17. Chapter 18Earnings Per Share Question MC #61 (Points: 2.5) Assume a company had net income of $20,000 and 8,000 shares of common stock outstanding the entire year. Also assume there were two potentially dilutive issues outstanding for the entire year: Effect of Assumed Conversion Numerator Denominator #1 $ 8,000 6,000 #2 $ 12,000 5,000 What is diluted earnings per share for this company for the year? 1. $2.00 2. $2.40 3. $2.50 4. $2.11 Save Answer 18. Chapter 18Earnings Per Share Question MC #9 (Points: 3) Of the following, select the incorrect statement concerning earnings per share. 1. During a period, changes in stock issued or reacquired by a company may affect earnings per share. 2. Under a simple capital structure, no adjustment to shares outstanding is necessary for a stock split on the last day of the fiscal period. 3. During periods when all income is paid out as dividends, earnings per share and dividends per share under a simple capital structure would be identical. 4. During a loss period, the amount of loss attributed to each share of common stock should be computed